Thinking of leasing a business - is this a good deal?

Dublinstar

Hi

Im thinking of buying a 5 year lease for 25 grand, monthly income is 4-6 grand gross, outgoings monthly (rent, electricity) is 2,000 euros. I dont think this includes wages but its a small enough scale operation, Im looking at getting 12 hours a day covered.

Is there some sort of basic business formula for working out if leases are worth it? Im going to be shown records that prove the income is there and try to haggle with the price.

Any advice very welcome.

Nuttzz

4000 income
-
2000 expenditure
-
?? wages
-
416 cost of lease per month
=
??

look at the books fully, depends on the wages, is there any stock to be purchased? that would have to be factored in too.

boa-constrictor

Thats sounds a bit expensive to be honest but it depends on what kind of business it is, how much annual rent you'll have to pay and what your getting for the money.

Also, ask yourself why the other guy is leasing the business if its so profitable. In most cases (pubs are a great example) the owner leases it for such a high price that an operator hasn't a hope of making a decent profit.

Dublinstar

Only getting back to this now. Its still there for 25 grand 2 months on which is making me have rethink about the price. 20 thousand would be more viable. Any more comments are welcome.

Nuttzz

again it would depend on the type of business and if there was a possibility to grow it

antoinolachtnai

Is this a lease or a licence and is the term definitely 5 years, not 4 years 9 months? This makes a difference when it comes to renewing the lease at the end.

Is this an assignment or a new lease? What do you know about the landlord? What's the situation with rent reviews? Also, you need to check whether there's been any regulatory issues (e.g., Dept. of Health, building control, etc.). You don't want to buy a load of bother.

This sounds like a cash business. It's very difficult to know how to treat the books in this case. I wouldn't be surprised if you found that the numbers have risen in the last few months, indicating strong growth (but I wouldn't take this too seriously). You need to look at things like customer volumes and footfall.

Honestly, if you haven't got experience with this sort of thing, I would advise you to just walk away. Or else get proper advice on this either from an experienced friend or professional. Send me a PM if I can help out a bit (no payment or obligation of course).

Best,

Antoin.

Bandara

Wrong thread.